Coles Myer tipped to enter the race for ALH

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After four months of inaction, Coles Myer is believed to be on
the verge of launching a bid for Australian Leisure &
Hospitality, which could see rival retailer Woolworths knocked out
of the race to snare the lucrative pubs and pokies operator.

The market was rife with speculation last night that Coles would
today trump Woolworths' $3.15-a-share cash bid for ALH, with a
scheme of arrangement possibly offering as much as $3.35 a
share.

The deal, which would value ALH at $1.18 billion, is expected to
be made in partnership with Macquarie Bank, which would likely run
ALH's 130 pubs, leaving Coles with the retail liquor business and
possibly also ALH's valuable land bank.

If the speculation is correct, the offer would be a 4.3 per cent
premium to ALH's closing price yesterday of $3.21 and a 20c premium
on the Woolworths bid.

The speculation came a day after ALH paid private equity group
Newbridge an $11 million "break fee" and two weeks after Woolworths
increased its offer.

The $3.15-a-share offer from Woolworths and its bid partner, the
Melbourne hotel king Bruce Mathieson - made two weeks ago after
Newbridge also made a play for ALH - retains an element of
certainty: the offer closes on October 18, and shareholders will be
paid within five days.

That compares with the several months it could take with the
scheme of arrangement.

ALH has been in play since July when the Woolworths-Mathieson
joint venture, Bruandwo, offered $2.75 a share.